NFA looks to future opportunities, branding

[Beavercreek, Colo] The National Floorcovering Alliance (NFA) — 42 of North America’s largest dealers — met here April 4 – 7 for the group’s spring meeting — an opportunity to discuss challenges facing members such as tight margins and big box competition as well as to propose new programs like an NFA brand and a group effort to solve issues like an aging sales force.

Business conditions overall have improved since last year. Most dealers are reporting business up anywhere from single to double digits. Margins remain tight, even for these dealers — most report flat margins. A few said they are up a little due to concerted efforts.

“Business is getting better,” Sam Roberts, owner, Roberts Carpet and Fine Floors, told FCW, during the vendor round-robin, where members visit each of the group’s core vendors in one day. Roberts’ business is up approximately 17 percent versus a year ago, but margins remain tight. “I’m hoping as business continues to improve things will A, get better for specialty stores, and B, see margins improve,” he said.

The first quarter was quiet in Montana, according to Jon Pierce, general manager, Pierce Flooring. “Then when the snow went away, something happened. We’ve had a nice uptick in retail, in builder business, property management business and contract,” he said, attributing better business conditions in the region to the oil and gas boom in Western North Dakota, which has hit Billings, Montana “like a tsunami.” Pierce added, “It’s been a grueling four or five years. We do see light and we are geared up.”

NFA convention format includes a Two-Minute-Drill when members share best practice or some operational information. But this year NFA president, Phil Koufidakis, also president of Phoenix-based Baker Brothers, asked each member to cover how much business was up or down, how margins were holding up, best promotion of the last six months, and biggest challenge.

Darren Braunstein, vice president for Worldwide Wholesale, based in Edison, N.J., reported that business slowed following last fall’s Category 4 Hurricane. But, since December, business has been up double digits. “It’s the benefit of pent-up demand,” he said.

Margins for the store remain “consistent” though Branstein reported they have been trying to get margins up. “The challenge is that customers are shopping more. They have more time,” he noted. One of the tricks in Worldwide’s box — as with many NFA members — is private labeling. Braunstein said they have done so with carpet for many years. Now they are moving in that direction for hard surface.

Although the consumer is back in the market, she has changed her buying habits, said the group. “Lack of loyalty is compounded by technology at her fingertips,” Pierce said. “She’s more savvy and value conscious.”

Business is up double digits in 2013 for Nebraska Furniture Mart as well, reported Dave Snedekar, director of flooring. Margins are up slightly over the past six months. Snedekar said his biggest challenge remains the perception by consumers that big box stores have the lowest prices. Nebraska’s marketing department has started an advertising campaign to show that’s not so, he said.

Jeff Macco, president Macco’s Flooring in Wis., and Fla., concurred. “We have phenomenal success every time we run one.” Macco said his business is up in the 20 percent range for the past six months.

One of the biggest challenges mentioned around the room is the hiring of competent sales people. More than one NFA member focused on the fact that the sales staff is aging, and that replacing them is becoming increasingly difficult. “Personnel is my biggest challenge,” said Ian Newton with Flooring 101 based in Oxnard, Calif. “There is not a big pool of qualified people to draw from.” Newton’s conclusion? “One solution is technology. It’s the key to training new sales people.”

Jerry Jones, owner, Cassity Jones Inc., Longview, Texas, said his employee challenge is exacerbated by his location in an oil and gas community. The boom in that industry is attracting employees who might otherwise be sales staff. “No younger people want to come into sales,” he said. Jim Winn, president, Carpet Distributors, and Roberts said specifically that their sales teams are aging and are hard to replace.

Koufidakis said that the sales personnel issue was nearly unanimous and he proposed the group put some resources toward looking at what might be done as a group to find solutions.

Marketing ahead
Over the years, the NFA has developed group buys that benefit the membership and provide significant volume for partner mills. The first major effort was a very successful roll buy from Shaw Industries. Next came a coordinated effort with Armstrong. Those programs continue to evolve as the group works on advantageous buys with a variety of product categories and vendors.

A group brand may be next, according to Koufidakis. “It just makes sense,” he said. The exact name is under consideration pending approval by the membership, but the group voted unanimously to proceed with the concept.